Car Sense

Ridesharing Services are Picking Up

by
Leah Knapp
on
November 18, 2014

Ridesharing & Insurance

If you love your car, you want the perfect kind of auto insurance that's worthy of it. But what if your car serves as a means of transportation for many? ERIE has you covered. Find out what ridesharing drivers need to know (or not know) about their insurance coverage.

Need a Ride? New ridesharing apps are picking up. Here’s what you need to know.

20%: The percentage of respondents to a University of California, Berkeley, survey who would be willing to use real-time ridesharing at least occasionally.

TNC: Shorthand for Transportation Networking Company, also known as a ridesharing company.

42: The number of states (including the District of Columbia) where users can grab a rideshare ride (Caveat, this number changes quickly, so by the time you read this it’s probably already outdated.)

Liability: The most common type of insurance offered by rideshare companies for its drivers. Liability covers other people’s expenses if a driver causes an accident – but not the driver’s. Not offered by most companies? Comprehensive and collision coverage. Comprehensive and collision: Lack of coverage means that drivers may have to pay out of their own pockets if something happens to their car while they’re carrying passengers.

Ridesharing – [rahyd-shair-ing]*Noun
1. An act or instance of sharing rides or transportation.
2. Services that arrange one-time shared rides on short notice via smartphone apps.
3. One of the hottest and fastest growing trends in transportation.

According to the Future Advisor Blog, Uber and Lyft – the two largest ridesharing companies in the country – provided 1.4 million rides over a one-year period.

If you just read that sentence and thought, “Who? What? Ridesharing?” you may be missing out on one of the fastest growing trends in our rapidly evolving “sharing economy.”

An alternative to traditional taxi services, ridesharing companies like Uber, Lyft and Sidecar use smartphone apps to connect passengers with nearby, privately contracted drivers. But while ridesharing is becoming increasingly popular, it’s also controversial due to the confusion around who, if anyone, provides insurance coverage if a driver is involved in a crash.

How confusing is it, you ask? Insurance varies among ridesharing services. Some companies provide liability coverage, which pays for damage a driver causes to other people or property. Some ridesharing companies may offer a small amount of “contingent coverage” for certain types of damage that kicks in if the claim is denied by the driver’s insurance company. Other companies may not provide coverage in what’s call “the gap”—meaning the time between when the app is on but before a driver is commissioned to pick up a passenger.

The drivers are at risk of having to pay for damage or injuries to themselves and their property out of their own pockets since personal car insurance policies may not cover cars used as taxis.

Confused yet? You’re not the only one. So were these ridesharing drivers.

To eliminate this confusion, Erie Insurance has launched what it believes to be a first-of-its-kind coverage to protect drivers who drive for ridesharing services. The new car insurance coverage eliminates the longstanding confusion over what’s covered and when. With ERIE’s new coverage, the driver has insurance coverage during every part of the trip—before, during and after the hired ride.

“The Erie Insurance motto is ‘Above All in Service,’ which means we put Customers first and provide them with the best possible protection,” said Cody Cook, vice president and auto product manager, Erie Insurance. “In this case, we saw a need in the sharing economy and filled it.”

The new coverage is available to people who put a “business use” designation on their personal car insurance policy.

“‘Business use’” traditionally has covered people who use their personal cars for things like delivering pizza or flowers, but has historically excluded—meaning not covered— people who use their cars as taxis,” said Cook. “We are removing that exclusion, so now if you use your car for a ridesharing service, there’s no confusion over what’s covered and when. You’re covered during every part of the trip—before, during and after the hired ride. We know of no other insurance company that is offering something like this.”

According to the Future Advisor Blog, Uber and Lyft – the two largest ridesharing companies in the country – provided 1.4 million rides over a one-year period. If you just read that sentence and thought, “Who? What? Ridesharing?” you may be missing out on one of the fastest growing trends in our rapidly evolving “sharing economy.”/blog/ridesharing-servicesErie Insurancehttps://www.erieinsurance.com/-/media/images/erieinsurance/erieinsurancelogo.png